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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: FLSTF97 who wrote (17619)	2/10/2000 3:45:00 AM
From: Mike Buckley	Read Replies (7) \| Respond to of 54805

CREE in the simplest of terms Fatboy, Hope that helps. Immensely. You have no idea how much! (Okay, having known a carpetologist, you probably do have a terrific idea of how much help I needed. :) To all, Seriously, folks. Think about what just happened in the big picture of using gorilla-game concepts to understand a company. In a total of four posts (two questioning posts of mine and two answering posts of Fatboy's), I came to understand the power of a company that I previously knew virtually nothing about. Moreover, the arena of the semiconductor industry is one I've always understood the least and consequently been burned the most in past investments, to the point that many times I swore I'd never again invest in it or any cyclical industry. (Yes, I still believe semis are cyclical but that's an entirely different subject.) For those who are having an understandably difficult time initially grasping the essence of what gorilla gaming is all about, focus on grasping the most fundamental issues in the simplest of terms. Using CREE as an example: Q: What does the technology (the product) do? A: One produces SiC. Another produces devices made from SiC. (Remember: break it down to those simplest of terms! Try to keep all answers to three- or four-word sentences!) Q: Is the technology proprietary? A: Yes. Q: Is the technology open? A: Yes. Q: Are there high switching costs? A: I haven't gotten that far. I'm only a freakin' carpetologist! But I suspect so. Q: Has the value chain formed? A: Probably not. It appears to be coming together in the product of blue LEDs more than other products. Q: When looking for a tornado, what is the constraint that has kept it from forming? A: Capacity. Q: What's going to eliminate that constraint? A: Increased manufacturing capability. Q: Why will manufacturing capability increase? A: Factories are being built. Licensing the manufacturing technology may add more capacity. Q: When is that likely to happen? A: Probably late this year or sometime next year. In summary, I've joked about the fact that I'm interested in any company that might some day replace the light bulb. But the fact is that at this ungodly hour of the morning, I am now seriously interested because for the very first time I now have an incling about the company IN GORILLA-GAMING TERMS, thanks to Fatboy's answers to a half-dozen of my questions. That's ALL it took. If I've read a sum total of ten posts about CREE in full, I'd be surprised. I simply haven't taken the time and only did so recently because Frank hinted that he'd like me to get involved in the discussion from a gaming point of view. My very long-winded point is that this gaming stuff really does work when it comes to understanding the power or weakness of a product. If you don't get it yet, persevere. It will be well worth it to you! In my mind, there is no set of investment skills that is more easily transferred from product category to product category, from industry to industry, or from company to company than gorilla-gaming skills. And there is certainly no set of skills more vital to our long-term success. Damn, this is exciting! :) --Mike Buckley

To: FLSTF97 who wrote (17619)	2/10/2000 6:45:00 PM
From: Eric Jacobson	Read Replies (1) \| Respond to of 54805

Re: Cree FATBOY, I guess I'm not as sharp as carpetologists, cause I'm having a hard time understanding some of this Cree stuff. I've visited their website, read their 10K, the Stephens research reports, and thru numerous posts, and still don't quite understand two things. 1. First, I understand they have a proprietary technology to grow SiC. I don't understand to what extent, as you and Mike said, that this proprietary technology "allows them to use the raw SiC materials to make specific devices." 2. I understand they, along with others, make blue LEDs. I don't understand the proprietary nature of this market or how, as you said, Cree's IPR in this area forces other manufacturers' blue LEDs to be "mostly made in cost disadvantaged material/ process." I would be most appreciative if you could explain this a little more. Also, a hyperlink reference to another source, like to a section of the 10K or the company's website, might help it sink in a little bit. Thank you, Eric